China now the top holder of U.S. debt

Good news for those of you who answered "China" on question 7 of the current FP Quiz: Your instincts are now correct. At the time of publication, U.S. Treasury data still showed that Japan held the most U.S. treasuries of any country. But new figures reveal that China has now taken the top spot. China increased its holdings to $585 billion in September, compared with $541.4 billion in August. Meanwhile, Japan shaved its holdings from a high of $600.7 billion in March of this year down to $571.4 billion in September.

The October figures will be even more interesting, though. Aside from the $585 billion, China was holding some $400 billion in Fannie Mae and Freddie Mac debt. With the acquisition of the two mortgage lenders by Hank Paulson, American Taxpayers, et al., China announced it would decrease its dollar holdings to diversify its foreign reserve portfolio. How much did China help fund the $700 billion TARP program? We'll know soon.

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Hagel speaks (unlike the rest)

At a time when no other rumored cabinet picks are talking, that's just what Nebraska Senator Chuck Hagel did this morning at the John Hopkins School of Advanced International Studies. The Nebraska senator gave a speech entitled "Toward a Bipartisan Foreign Policy."

So first, why is Hagel talking? Marc Ambinder thinks this means Hagel is out of contention for a spot in the Obama cabinet. Michael Abramowitz still thinks Hagel is a "live possibility" for the cabinet -- and others consider secretary of defense the best option for the decorated Vietnam veteran.

The senator makes the GOP wish list for the cabinet, and that might mean more than we think given Obama's promises of bipartisanship -- especially since Hagel traveled to Iraq with Obama this summer and has broken with his party on the war.

From his comments today, I think he could still be in the running for a post. His remarks -- decidedly big-picture, painted a vision of foreign policy and domestic political cooperation for the next administration. A few key points:

  • Today, the senator said, is "one of those historic confluences" where the world will have to "reorder, restructure, and redefine" the world order.
  • Senator Hagel linked despair and desperation to much of the world's insecurity, suggesting that "quality of life and standards of living" were the foundations of stability in a world where nearly five sixths of the population live in developing countries.
  • Hagel demonstrated a clear esteem for international institutions such as the United Nations, stating that he believes those bodies will be even more important in the next 25 years than in the past. The world, as he put it, is more interconnected, complicated, and "combustible."
  • When asked about development, Senator Hagel praised Defense Secretary Robert Gates for his speeches throughout the country on the need to take militarization out of foreign policy. "Bob Gates understands this better than anybody at the White House," he said.

Sounds like a good pitch for succeeding Gates at the Pentagon to me.

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